Poor reception

Poor reception by David Lias Over 60 channels of cable television. Local and long distance phone service. Internet service, high speed data transfer, distance learning and telemedicine.

Vermillion could be on the verge of receiving all of these services, had the Vermillion City Council and Dakota Telecommunications Group (DTG), now known as DTG/McLeodUSA, been able to come to an agreement in 1999.

Compared to the difficult and ultimately fruitless process experienced in Vermillion, DTG/McLeodUSA's negotiations for cable television franchises were hammered out with comparable ease in other communities, according to Patrick Mastel, DTG/McLeodUSA's regional counsel. The difficult negotiations and the relative ease with which DTG/McLeodUSA has been accepted in other communities indicates that Vermillion city leaders came to the table last spring unwilling to compromise.

DTG noted early last year that the granting of a non-exclusive cable television franchise by the city would trigger the construction of a new city-wide infrastructure over which DTG would provide voice, video and data services.

The city of Vermillion would incur no costs associated with the construction of this new network. DTG also noted early last year that it was seeking no financial assistance from the city or from local taxpayers, and was prepared to pay the city a regular franchise fee based upon its cable TV revenues.

City stumbling blocks

The Vermillion City Council insisted, however, that DTG also pay franchise fees on Internet services. DTG disagreed with that requirement, noting that federal courts are still in the process of deciding whether that fee should be charged to customers.

Internet franchise fees weren't the only source of disagreement. DTG claimed that definition of cable services, signal input points, institutional networks, liquidated damages and covenants in the cable ordinance offered by the city council made its acceptance a poor business decision.

DTG stated that it wasn't completely shutting the door on future negotiations with Vermillion. The company evidently was convinced, however, that it could make no headway here. So DTG set its sights on other area communities, many of them much smaller than Vermillion.

The telecommunications company and its cutting edge technology has been welcomed by these small towns, while Vermillion struggles some days just to receive good television reception.

Little has changed

Vermillion took another route in 1999. The franchise of Zylstra Communications Corporation, a Yankton-based firm that provided cable television service to Vermillion for several years, was scheduled to expire Sept. 30, 1999.

Ten days before that expiration date, the city and Zylstra entered into an agreement that renewed the company's franchise in Vermillion.

Since that time, Zylstra Communications has been purchased by Mediacom LLC, a firm that operates cable TV systems in several states.

Little else has changed in terms of cable television in the city since then.

Vermillion cable subscribers, for the time being at least, have viewed images on their screens that have grown too familiar. Local stations, like KUSD (South Dakota Public Television) which originates in Vermillion, barely come in at times. Network television affiliates, such as KMEG and KCAU out of Sioux City, IA, and KTTM, which broadcasts the Fox Network out of Sioux Falls, now and then appear more like they are being received by an old-fashioned pair of rabbit-ear antennae rather than a cable TV hookup.

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Mediacom LLC, Vermillion's cable television provider, has enhanced its station lineup recently by adding six new selections to its basic package.

For several months now, however, after Mediacom purchased Vermillion's cable system from Zylstra Communications, Channel 3, set aside for the community's local broadcasts, has remained dark.

It now only comes to life for live broadcasts of Vermillion's city council and school board meetings.

For a significant amount of time last year, the meeting coverage stopped because of equipment problems.

As Mayor William Radigan stated at June 5's city council meeting, Vermillion's cable television "stinks."

McLeodUSA now too busy

City Manager Jeff Pederson, at the direction of the city council, wrote a letter to DTG/McLeodUSA in early March, inquiring if the firm had any interest in continuing negotiations for a cable television franchise.

DTG/McLeodUSA officials contacted by the Plain Talk have said that they hope to someday have a presence in Vermillion.

But Mastel noted that the firm has other business to take care of first.

"As it stands now, we are simply too busy completing last year's builds and gearing up for this year's builds to consider further discussions on Vermillion's franchise," he wrote in a March 15 reply to Pederson.

"At the present time, we're too busy completing last year's builds and working on the 2000 builds to even have a chance to look at that (coming to Vermillion)," Mastel told the Plain Talk. "It definitely would not even be considered for the year 2000."

Vermillion not included

In South Dakota, DTG/McLeodUSA is either designing or building network systems in Colman, Dakota Dunes, Egan, Flandreau, Huron, Jefferson, Madison, Mitchell and Watertown.

During 1999, DTG/McLeodUSA was building new networks simultaneously in 10 communities spanning from Marshall, MN, to Yankton. Canton's system was completed in the summer of 1999; Yankton customers began to receive service this year, and service is expected to be turned on in most of the other towns this winter.

DTG/McLeodUSA also constructed networks during 1997 in Centerville, Harrisburg, Tea and Viborg.

Following unanimous approval at a citywide election on Oct. 19, Lakeside, IA, is one of the latest of several communities that has approved DTG/McLeodUSA construction plans for 2000.

DTG/McLeodUSA expects to build new hybrid fiber optic networks in 14 communities this year. The state-of-the-art networks will provide local and long distance phone service, cable TV service and Internet access, all on the same system. The new systems will introduce competition to the communities' incumbent cable TV and local phone service providers.

Storm Lake, IA, next door to Lakeside, is also on DTG/McLeodUSA's construction list.

In Minnesota, DTG/McLeodUSA has been granted approval to build networks in Slayton, Tracy and Tyler. Additionally, the company expects to rebuild its existing cable systems and expand them in order to also provide telephone services in the towns of Currie and Lake Wilson.

DTG/McLeodUSA has 27 locations in Iowa, Minnesota and South Dakota, including the communities of Alcester, Canton, Centerville, Chancellor, Colton, Gayville, Harrisburg, Humboldt, Hurley, Irene, Lennox, Parker, Tabor, Tea, Valley Springs, Viborg, Wakonda, Worthington, Luverne, MN, Marshall, MN, Pipestone, MN, St. James, MN, Worthington, MN, North Sioux City, Yankton, Inwood, IA and Larchwood, IA.

"We have been pleased with the response of other communities which have moved quickly to negotiate acceptable competitive franchises and we must give them first priority," Mastel stated in his letter to Pederson. "After we meet current obligations, we will be in a position to reconsider additional opportunities."

Economic factor

Mastel told the Plain Talk that DTG/McLeodUSA would probably have begun building a new cable television system in Vermillion earlier this spring if a franchise agreement could have been reached.

"The first customers would have been turned on in November and December, and it would have been finished up in the spring (of 2001)," Mastel said. "But the main lines would have all been in. It would have been just the last little bits and pieces.

"The key is the economic development that a network brings � not the economic development up front in terms of how much money we can get off of it, but it's the economic development over the whole course," he added. "If you look at the other cities that have gotten a competitive franchise fairly quickly, they have seen that."

Mastel said DTG/McLeodUSA is installing systems with bandwiths of 750 megahertz or better in area communities. He believes Vermillion's present cable system has a bandwith of 350 megahertz.

"Our 750 megahertz is the bandwith of the whole pipeline," he said. "Cable, phone, high speed Internet is all coming over the same piece of fiber. It's like comparing a garden hose to a fire hose."

DTG/McLeodUSA does have a presence in Vermillion � it is the community's primary Internet provider.

The lack of a cable television franchise, however, means DTG/McLeodUSA can't provide high speed Internet services through its own high speed cable system.

Instead, Vermillion citizens who want to log on to the World Wide Web must connect to DTG/McLeodUSA Internet service via phone lines.

The World Wide Wait

It's a process that can't compare to cable modem access to the Internet.

"You (Vermillion) are dependent on the quantity and quality of the telephone systems," Mastel said. "Right now, dial-up for Vermillion (for Internet access) is on a US West network. We don't control the network, and so we can only get a certain number of lines and a certain number of circuits."

Citizens in communities that have or are allowing DTG/McLeodUSA to construct new cable systems have the ability to connect their computers to the Internet with high speed cable modems.

The slowest, and least expensive cable modem connection offered by DTG/McLeod USA is 256k. It allows subscribers to download data seven times faster than the typical 33.6k modem download rate over phone lines.

The fastest speed offered by DTG/McLeodUSA's cable modem connections is 768k. Data is received 22 times faster than a 33.6k phone line modem through this connection.

It means that the citizens of Vermillion, the home of the state's second largest state university, find themselves lagging far behind smaller communities, such as Centerville, Alcester, Viborg, Tea and Canton.

"If you are connecting on our own network, if there are problems, they are 100 percent our fault," Mastel said. "So we're dependent upon others when we have a dial-up like Vermillion has right now. It (accessing the Internet directly through DTG/McLeodUSA's network) takes care of that problem. That problem becomes not a problem."

Vermillion is also lagging behind in the field of telecommunications with Yankton, its larger neighbor to the west. Yankton is served by both Mediacom and DTG/McLeodUSA. Unlike Vermillion, citizens in Yankton have access to not only state of the art cable television and high speed cable modem Internet access, but also to DTG/McLeodUSA's phone service, which offers lower phone rates than US West.

Cooperative communities

"There are cities all around you where competitive franchises were granted," Mastel said. "This year, we've got a franchise for Watertown, Elk Point was done last fall, and our contractor started recently in Madison."

One of DTG/McLeod's more recent franchise agreements was granted recently in Mitchell. In that community, DTG/McLeodUSA is in direct competition with longtime providers US West Communications for phone services, and Mitchell Cable, which is co-owned by communications giants Midcontinent Communications and AT&T, for cable television services.

"Our approach has been the same in every community, and Mitchell, to be honest with you, did have some of the same thoughts and ideas that Vermillion had," Mastel said. "In fact, they were represented by the same attorney out of Grand Rapids, MI. But we tried to resolve as many issues as possible, and with the remaining issues, we went before the city council and the city council instructed the attorneys, 'this is what we want, proceed' and they did and we have a franchise."

DTG/McLeodUSA is so busy right now that it can't schedule Mitchell for construction until next year at the earliest. That means if Vermillion and the telecommunications firm ever do reach a franchise agreement, work wouldn't be able to start here for at least a year.

DTG started in 1902 as the Hurley Telephone Company. It has grown from 35 employees to more than 200 employees in the last few years.

Although DTG became aggressive before merging with McLeodUSA last March, the company now has the financial backing of one of the largest local exchange carriers in the country.

McLeodUSA's total revenues for 1998 were more than $604 million. It has total assets of more than $2 billion.

DTG's estimated revenues have increased from $5 million a year from five years ago to about $35 million to $40 million with the help of McLeodUSA.

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